Micron Revenue Drops As Trade War Tightens

The ongoing trade war between the United States and China has cost the supply of Micron to increase, while sales dropped tremendously.

The sales of Micron this fourth quarter fell for a whopping 42 per cent or about $561 million, from last year’s net income of $4.33 billion. In August 2019, the company has recorded a revenue of $4.87 billion, while in August 2018, the revenue was $8.44 billion.

Micron has lowered its sales expected this year, with sales projection of only $5.1 billion compared to its projection last year of $7.9 billion.

According to reports, the company’s products are most in-demand. However, it suffers huge loss in the Chinese market, as some companies prefer to get storage products from Chinese suppliers.

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CEO Sanjay Mehrota said, “We are encouraged by signs of improving industry demand but are mindful of continued near-term macroeconomic and trade uncertainties.”

Micron Revenue Drops
Image from Yahoo Finance

Signs Of Bottoming Stock Price

In addition to sales, the company’s stocks have drastically dropped by 12 per cent this fourth quarter. Stock prices are uptrend since December last year, but with the recent clash between the US and China, the price has dropped too.

The company has reached out to the US Department Of Commerce to sell more products to Huawei, but the department said that if the trade war continues, it could see a worsening decline in sales to Huawei.

Investors are already looking for signs of bottoming of Micron Technology’s financials before pulling out their money. At the moment, predicting the future financials isn’t possible as share prices are yet to change. For some companies, stock prices are forward-looking, but for Micron, it’s the reverse.

According to Seeking Alpha, investors don’t need to look for signs of bottoming as the stock prices have already declined big time.

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Declining Huawei Orders

Micron’s biggest customer, Huawei, sourced from other companies, buying only $1.7 billion worth of DRAM and $1.1 billion of NAND.

The current tariff of China for goods from the United States is about $60 billion annually. Meanwhile, tariff for Chinese goods has an additional $200 billion from the US federal government.

Because of the huge tariff, Huawei considers buying from other storage solutions firms outside of America. This has led to a decline in Micron’s sales for this year.

Micron Technology is based in Idaho, United States. It has four major business units namely, computer and networking, mobile, storage, and embedded.

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